Correlation Between Applied Finance and Jhancock Short
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Jhancock Short at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Applied Finance and Jhancock Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Core and Jhancock Short Duration, you can compare the effects of market volatilities on Applied Finance and Jhancock Short and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Applied Finance with a short position of Jhancock Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Jhancock Short.
Diversification Opportunities for Applied Finance and Jhancock Short
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Applied and Jhancock is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Core and Jhancock Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Short Duration and Applied Finance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Applied Finance Core are associated (or correlated) with Jhancock Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Short Duration has no effect on the direction of Applied Finance i.e., Applied Finance and Jhancock Short go up and down completely randomly.
Pair Corralation between Applied Finance and Jhancock Short
Assuming the 90 days horizon Applied Finance Core is expected to generate 5.5 times more return on investment than Jhancock Short. However, Applied Finance is 5.5 times more volatile than Jhancock Short Duration. It trades about 0.13 of its potential returns per unit of risk. Jhancock Short Duration is currently generating about 0.18 per unit of risk. If you would invest 1,107 in Applied Finance Core on September 3, 2024 and sell it today you would earn a total of 160.00 from holding Applied Finance Core or generate 14.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Core vs. Jhancock Short Duration
Performance |
| Timeline |
| Applied Finance Core |
| Jhancock Short Duration |
Applied Finance and Jhancock Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Jhancock Short
The main advantage of trading using opposite Applied Finance and Jhancock Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Jhancock Short can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Jhancock Short will offset losses from the drop in Jhancock Short's long position.| Applied Finance vs. Jhancock Short Duration | Applied Finance vs. Astor Longshort Fund | Applied Finance vs. Maryland Short Term Tax Free | Applied Finance vs. Touchstone Ultra Short |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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